STATE OF KERALA Vs. THAMPI

JUDGEMENT

(1.) The State has filed this revision petition challenging the appellate order issued by the Tribunal granting deduction towards depreciation in the computation of taxable turnover for works contract of the respondent for the year 1997-98. We have heard the Government Pleader appearing for the petitioner and counsel appearing for the respondent.

(2.) The respondent was engaged in metal fabrication work for various parries. In fact, among the several contracts executed by the respondent during the year 1997-98, they paid tax at compounded rate under section 7(7A) for some items of work which is 70 per cent of the rate of tax payable on the entire contract amount for the item of work under the Fourth Schedule to the Act. So far as the contract receipt for the balance items of work is concerned, the respondent claimed assessment under section 5C of the Kerala General Sales Tax Act, 1963 (hereinafter called, "the Act") which provides for various deductions from the contract receipts for determination of the taxable turnover. Even though various deductions including labour charges were claimed under section 5C, the respondent did not claim any amount towards depreciation in assessment. In the appeal filed against the assessment before the first appellate authority also, no claim of deduction towards depreciation of machinery was made in the determination of taxable turnover. However, when second appeal was filed before the Tribunal, a fresh ground was taken by the respondent stating that they are entitled to depreciation of machinery as a deduction under section 5C(1)(c)(ii) of the Act. Even though Department raised objection against maintainability of the ground and against allowing the claim which is not specifically provided in the above section, the Tribunal still held that depreciation is allowable under the word "otherwise" used in the sub-section. It is against this order of the Tribunal, the State has filed the revision contending in the first place that the Tribunal is not entitled to entertain a new claim on facts and that the claim in any case should not have been allowed by the Tribunal because the section does not allow deduction of depreciation on machinery in the computation of taxable turnover of works contract.

(3.) In order to appreciate the contentions raised by the parties, we have to necessarily refer to the relevant provision which is extracted hereunder :